SNRP.L Regulatory News (SNRP)

Strategic Natural Resources Plc

("SNR" or the "Company")

Discussions with potential strategic partners,

further draw down on existing loan facility and variation of loan facility terms

and

operational and business update

SNR, the AIM listed natural resources developer operating in South Africa, is today providing a update on its business and operations. SNR has a 74% owned subsidiary, Elitheni Coal (Pty) Limited ("Elitheni"), which owns and operates a coal mine in the Eastern Cape of South Africa.

Potential strategic investor/partner

Over recent weeks the board of SNR (the "Board") have been approached by, and have held discussions with, a number of parties (including international coal companies) who have expressed an interest in working with the Company to develop its coal resources in the Eastern Cape. The discussions with these parties have reinforced the Board's belief, not only in the potential of its coal licences and reserves at Elitheni, but also the major logistics we have secured in both rail and port facilities. The Board, as a consequence of these preliminary discussions, has resolved to seek a partner who will invest in the Company's operations at Elitheni. At this time the Board envisage that this investment will be either through: (i) a subscription of new equity in SNR (such subscription not exceeding 29.99% of the Company issued share capital, as enlarged by such subscription); or (ii) an investment directly in the subsidiary share capital of Elitheni (either through a subscription for new Elitheni shares or a sale of part off the Company's existing shareholding). It must be emphasised that all these partnering discussions are at an early stage and there can be no certainty that any investment will be forthcoming. It is not intended by the Board that any investment in SNR would trigger an offer under the Takeover Code or that any investment in Elitheni would result in the Company's shareholding falling below 51.0%.

The Board are working to complete an investment by the end of June 2013 and are currently preparing the appropriate due diligence materials for a number of interested parties. The Board view an investment by a strategic investor as an opportunity to accelerate opportunities for Elitheni Coal and be a source of long term funding that will also allow the Company to refinance its existing short term bridging loan with Land Consultants Limited ("LCL"), as well as providing funding for SNR's growth plans.

In anticipation of a possible strategic investment in the Company, the Board intends to convene a general meeting of the Company's shareholders in the near future to seek authority to issue up to 73.3 million new ordinary shares in SNR (being 29.99% of the Company's enlarged issued share capital) to a potential strategic partner/investor. In addition to this authority the Board intend to maintain/put in place sufficient share authorities as are required to satisfy the issue of share arising from the exercise of warrants and options or the conversion of amounts outstanding under the existing bridging facility with LCL (see below).

Further draw down on existing loan facility and variation of loan facility terms

To date the Company has drawn £3.5 million under the loan facility it has in place with LCL, further details of which were announced on 29 October 2012 (the "LCL Facility"). The Company has issued a drawdown notice for a further £1.0 million to be drawn down under the LCL Facility (the "Drawdown"). In addition, the Company intends to issue an additional drawdown notice for £1.5 million under the LCL Facility within the next two weeks (the "Additional Drawdown"). The issue of the Additional Drawdown notice is subject to certain South African regulatory approvals.

As a condition of the issue of the Drawdown and Additional Drawdown notices, the Company has entered into a deed of amendment with LCL (the "Deed of Amendment") to vary the terms of the LCL Facility as follows:

·; all sums previously drawn down under the LCL Facility and the Drawdown will be secured against 8% of the issued share capital of Elitheni ;

·; subject to South African regulatory approvals (including foreign exchange controls), which are expected to take place in the next few weeks, the Additional Drawdown will, once drawn down, be secured against the Company's wash plant and coal stocks;

·; the total amount of principal which can be drawn down under the LCL Facility has been reduced to £6,382,675 from £10,000,000. Following the Drawdown and the Additional Drawdown £6.0 million of principal will have been been advanced to SNR under the LCL Facility; and

·; the entire amounts drawn down under the LCL Facility and all accrued interest are repayable by no later than 30 July 2013, at which point the LCL Facility will cease to be available to the Company. At this time the Board envisage that the LCL Facility will be repaid from the proceeds of any investment by a strategic investor.

Any amounts drawn down under the LCL Facility (and the accrued interest) remain convertible into new ordinary shares in SNR at LCL's discretion at a conversion price of 25p per new ordinary share. SNR and Elitheni have agreed, as part of the Deed of Amendment, to certain anti dilution provisions in favour of LCL over Elitheni while the LCL Facility is secured on issued shares of Elitheni.

The funds from the Drawdown and Additional Drawdown will be used by the Company for general working purposes, including part financing the actions which have come out of the Company's operational review.

Update on the operational review

On 11 March 2013, the Company announced that the Board had implemented a full operational review at the Elitheni mine. This review, which has identified a number of challenges associated with establishing a mine in the Eastern Cape of South Africa for the first time in over 100 years, is approaching its conclusion and, as a result a number of changes, optimisations and interventions have been made and are being planned to be made to the mining process, the wash plant, the site set up and key personnel, which will enable Elitheni to commence deliveries of coal. In addition, alterations are being made to the transportation logistics between Elitheni and the Port of East London to assist in the movement of coal from the Elitheni mine to the port for delivery to Elitheni's customers. All of the key road, rail and port infrastructure is now in place.

A further update on the expected dates for the commencement of coal deliveries from the Port of East London will be given when the Company announces its unaudited interim results for the six months ended 28 February 2013, which will be announced before 31 May 2013.

Whilst the Company' cash position is constrained due to the delays in commencing deliveries of coal from Elitheni, the Board believe that the a successful outcome from the on going discussions with the confirmed interested potential strategic investors will enable the Company to meet its financing obligations in the short and medium term.

Gabriel Ruhan, SNR's CEO, commented: "We have made considerable operational changes over the last couple of months and we are busy implementing the recommendations that have come out of the review that I instigated when taking up the position of CEO a couple of months ago. This has delayed our shipment dates and will continue to affect full production level for a few more months, however the process will ultimately deliver a well run business with many future shareholder benefits. We are delighted with the significant interest expressed to us by a number of strategic partners recently. We continue to focus on commencing our export deliveries of coal as soon as possible. We recognise that the LCL Facility needs to be replaced by more appropriate funding for Elitheni and, based on our recent discussions with potential strategic investors, we believe we will soon have the right funding in place for us to deliver on the value which the Elitheni mine offers."

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For further information about Strategic Natural Resources plc please visit www.snrplc.co.uk